Zakat, the third pillar of Islam, is a mandatory act of charity that requires Muslims to give a portion of their wealth to those in need. It is a compulsory act of worship that reflects the social and moral responsibility of the financially able toward those in need. The term “Zakat” means “to cleanse,” signifying the purification of wealth and spiritual growth.

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Nisab refers to the minimum amount of wealth a Muslim must possess before Zakat becomes obligatory. Once this threshold is met, individuals are required to contribute 2.5% of their total wealth to those in need.

The concept of Nisab was established by Prophet Muhammad (PBUH) and is set at 20 Mithqaal of gold or 200 dirhams of silver. This corresponds to 87.48 grams (7.5 tola) of gold and 612.36 grams (52.5 tola) of silver.

It is important to note that if an individual exclusively possesses gold, the Nisab threshold for gold (87.48 grams) applies. However, if a combination of assets is held—such as a small quantity of gold (e.g., 1 or 2 tola), silver, cash, or other financial assets—the lower Nisab threshold based on silver (current value of 612.36 grams of silver) should be used.

Zakat is more than an obligation—it is a means of drawing closer to Allah (SWT). As a mandated act of charity, it safeguards the poor and vulnerable from deprivation, hunger, and financial insecurity.

Beyond benefiting those in need, Zakat brings immense blessings to the giver. It purifies wealth, erases minor sins, and nurtures generosity, fostering a heart free from stinginess.

Allah (SWT) says in the Quran:

“My mercy encompasses all things, but I will specify it for the righteous who give Zakat.” – (Quran 7:156)

“Alms (Zakat) are meant only for the poor, the needy, those who administer it, those whose hearts need reconciliation, for freeing slaves, for those in debt, for God’s cause, and for travelers in need. This is an obligation from Allah; He is All-Knowing and Wise.” – (Quran 9:60)

There are eight eligible categories of Zakat recipients:

1. The poor (Fuqara)
2. The needy (Masakeen)
3. Collectors of Zakah (Al-‘Aamileen)
4. Friends of the Islamic community and/or revert Muslims (Al-Mu’allafatu-Al- Quloob)
5. The cause of (freeing) the slaves (Ar-Riqaab)
6. Debtors (Gharimeen)
7. The way of Allah SWT (fi Sabilillah)
8. Wayfarer (Ibn-us-sabil)

Zakat must be paid by the one who is:

• Muslim
• Major (Baligh)
• Sane
• Sahib-un-nisaab (owner of wealth above the level of nisab)

If all of the above apply, you have to pay 2.5% Zakat on all of your savings and other applicable assets.

It is not obligatory to pay Zakat on every asset. Zakat is only applicable to assets that have the potential for growth or increase. These include:

• Trading Assets
• Cash & Cash Equivalents (e.g., prize bonds, traveler’s checks)
• Gold & Silver (for any purpose)
• Livestock (e.g., goats, sheep, cows, camels – with different Nisab thresholds)
• Agricultural Produce (Ushr)

Only the remaining balance of these assets at the end of the lunar year is subject to Zakat. Amounts spent throughout the year are exempt.

Zakat becomes obligatory only after a full lunar year has passed, provided that your wealth has equaled or exceeded the Nisab threshold for the entire year. Your Zakat year begins on the date your wealth first reaches Nisab and should be recalculated on the same date each year.

While Zakat can be given at any time, many Muslims choose to pay it during the Holy month of Ramadan, as the rewards and blessings of charity in this sacred month are significantly greater.